The Sunday Mail
China’s economy showed signs of recovery in August as Beijing rolled out stimulus measures to counter a slowdown, although a property market slump and Covid-19 outbreaks continue to weigh on the outlook.
Industrial production, retail sales and fixed-asset investment all grew faster than economists expected last month.
The urban jobless rate slid to 5,3 percent, while the youth unemployment rate fell from a record high.
The boost to retail sales was partly due to a lower base of comparison from a year earlier and a surge in car sales after Beijing gave buyers subsidies on electric vehicles. Industrial output was also supported by a big spike in electricity production during August’s heatwave, a rebound that is unlikely to be sustained.
The NBS said the data showed “the economy withstood the impacts of multiple unexpected factors and sustained the momentum of recovery”.
Even so, the economy faces a more complex and grim situation this year than in 2020, given the difficulty in controlling Covid-19 outbreaks and a slowdown in the global economy, Fu Linghui, a spokesperson at NBS, told reporters in Beijing.
Despite signs of improvement, the recovery remains fragile as Covid outbreaks spread to more parts of the country and the government tightens curbs to contain infections in the run-up to the Communist Party’s twice-in-a-decade leadership congress next month.
A property market slump also shows no sign of easing, with separate data on Friday showing home prices have now declined every month in the past year, with the contraction in August bigger than in July.
Investors were unmoved by the data, with the yuan’s breaching of the key 7 level to the dollar on Thursday weighing on sentiment. The CSI 300 Index of stocks fell 1,2 percent by the midday break, leading drops in Asia equities.
The yuan weakened 0,1 percent to 7,0187 per dollar in the offshore market, while the yield on 10-year government bonds rose 2 basis points to 2,68 percent.
The unemployment rate for people aged 16-24 fell to 18,7 percent from July’s record high of 19,9 percent.
Helen Qiao, chief economist for Greater China at BofA Global Research, said the data suggest annual growth may still be able to reach 3,5 percent this year, although domestic demand remains weak.
“We need to see more policy action to help,” she said in an interview on Bloomberg TV.
“In our view, the only policy that will help is to relax the Covid controls.”
The government and central bank took several steps recently to support the housing and construction industries, seeking to bolster an economy that’s slowed sharply this year. Government spending on infrastructure has also been ramped up and the central bank has cut interest rates to spur growth.
The People’s Bank of China refrained from another interest rate cut last week as the currency comes under pressure.
The offshore yuan weakened past the key 7 per dollar level for the first time in more than two years on Thursday. – Bloomberg